Theresa May isn't doing much about businesses' biggest headache

Since she proceeded through the door of Number 10, Theresa May’s regime has seemed indifferent, if not outright hostile to UK Plc. She dissolved her predecessor’s business advisory group, threatened to name and shame those who employ too many migrants and to force companies to welcome workers on their boards.

After the public rejected the narrative peddled by ‘elites’ about the dangers of Brexit, May seems to have reasoned that she ought to keep the nation’s business leaders at arms’ length. Given the triumph of Donald Trump’s populism in the US earlier this month, it wouldn’t have been surprising to see May give bosses a dressing down at the CBI’s annual conference this morning. (She hasn’t shied away from disappointing her audience in the past – ‘I am here to tell you that it's time to face up to reality’, she famously told the Police Federation as home secretary back in 2014).

Instead the Prime Minister sounded a conciliatory tone. She said ‘categorically’ that the government would not be ‘mandating works councils or the direct appointment of workers or trade union representatives to boards’ – a sigh of relief for those worried Britain’s businesses could be forced to adopt less agile board structures more common on the continent. She still plans on ‘ensuring employees’ voices are properly represented in board deliberations’ but through less dramatic means like ‘advisory councils or panels’. Such changes in combination with new rules on executive pay would, May reasoned, help improve the public’s trust in business. She is right to say businesses need to improve their collective reputation, but such proposals will only go so far.

The PM also pledged to boost government support for innovation. She committed to spending an extra £2bn on R&D by the end of this parliament and to make the tax system friendlier to businesses that innovate. She will launch a new review headed by former private equity boss Damon Buffini into how innovative start-ups can be helped to raise the money they need to scale up. And she promised to make it easier for small firms to access government contracts.

While May touched on the issue of Brexit and promised to listen to business voices while negotiating with the EU, she all but ducked the opportunity to talk about skills – and in particular about immigration.

Businesses often say one of their biggest challenges is attracting and retaining talent – a poll at the conference found this to be by far the largest issue for employers to deal with when trying to adapt to new technology. Successive governments promise to improve the education system but concern about the quality of graduates and school leavers continues to play on bosses’ minds and in any case improvements in the school system take a long time to filter through to the workforce.

Of course companies need to take some responsibility for training but they can only do so much. With employment rates at their highest level since the financial crisis the pool of available workers is small so many employers turn to migrants to fill their skills gaps.

But back in her time at the Home Office May made it increasingly difficult for companies to hire skilled workers from abroad, in the hope of meeting the government’s unrealistic target of bringing net migration down to the ‘tens of thousands’. It’s increasingly expensive and time-consuming to hire a worker from beyond the EU, even if they’re a stand out computer scientist, doctor, or lawyer.

May has shown little desire to change tack since taking on her new role. While she’s keeping her cards close to her chest on EU migration it seems that Britain will no longer participate in freedom of movement post-Brexit and the government remains committed to its arbitrary target – this morning May said she is still intent on ‘bringing immigration down to sustainable levels overall so we maintain public faith in the system.’ But if anything the system is too restrictive – just ask anybody who’s tried to hire a software developer in the past few years.

The PM rightly asked businesses to ‘work with me to show that the forces of capitalism, globalisation and free trade offer the best hope to the problems facing so many people in our country.’ But migration is an important part of that. Making it harder for businesses to find the people they need will seriously hamper their ability to be the innovative global powerhouses she says she wants them to become.